UK net economy report crosses silly line

Google-commissioned bumf is mentally interesting

A new report commissioned by Google, and timed to coincide with the first ever Parliamentary debate on the company today, puts itself and the internet at the heart of the British economy. But it does so by using some creative and interesting definitions.

According to Boston Consulting Group, the internet sector in the UK is worth £100bn a year or 7.2 per cent of GDP, almost as large as the UK financial services sector, and larger than utilities, transport or construction. That sounds a very large sum.

Google/BCG arrives at this by including all online e-commerce as an internet contribution to GDP, rather than a contribution made by retailers or services companies.

"The full value of goods sold online is counted because it gives the sense of the importance of the internet as a retail channel," say the authors. Why include the value of every good sold?

"Many of them might not have taken place without the internet as catalyst."

As Tim Worstall points out: "What they’ve done to get to their GDP number is take the value added of everything that is connected with the internet: rather than the value added by the use of the internet." Using this logic, the financial services sector is worth 100 per cent of GDP, because everything involves a financial service, such as retail banking.

The report estimates that B2B transactions conducted via the internet are worth £360bn, but doesn't include these in the final sum. Quite rightly: that would be crossing the silly line, and falling into the silly ditch.

The report has a sprinkling of anecdotes about successful business built on pay-per-click advertising, and laments that "collective intelligence" such as crowdsourced user-generated content isn't measured by GDP. And we learn that "the internet has brought the world closer together through email, IP telephony, instant messaging, and social networking".

The report can be found here. The Parliamentary Debate, tabled by MP Robert Halfon, commences at 2pm. Halfon is concerned by Google's attitude to personal privacy, offline and online.

Google must hope MPs have read the headlines, but not the report itself. ®

Bootnote

An earlier version of this story could have suggested that the $100bn figure included purchases made in store after online research. This was not the case, and the story has been amended to make this clear.